HSBC’s report discusses the European Central Bank’s (ECB) decision to maintain its key deposit rate at 2% and its implications for the euro. The report highlights that external developments and fiscal measures are expected to play a greater role in influencing the euro’s direction in 2026, given the ECB’s stable policy stance.
ECB’s steady policy impacts Euro outlook
“The ECB’s updated forecasts were hawkish, with growth projections raised to 1.2% for 2026 and 1.4% for 2027 (from its September forecasts of 1.0% and 1.3%, respectively) and only limited inflation undershooting for the next two years expected.”
“Our economists expect the ECB to maintain its current policy stance through 2026, with a possible rate increase in 2027.”
“Given this policy stability, developments in other major economies are likely to have a greater influence on the EUR’s direction. The EUR may also face headwinds if regional fiscal measures fall short of expectations or if external conditions become less supportive.”
Source: https://www.fxstreet.com/news/eur-ecb-policy-stability-shapes-outlook-hsbc-202512221037
